DALLAS — Paragon Outlet Partners LLC has broken ground on a 420,000-square-foot outlet center in suburban Grand Prairie that had been delayed since 2008 by the recession.
This story first appeared in the July 22, 2011 issue of WWD. Subscribe Today.
The $115 million center was originally planned by Prime Outlets but was excluded from the deal when Lightstone Group sold Prime to Simon Property Group in 2010. Land in Livermore, Calif., was also withheld from the sale.
“We were able to keep our development pipeline and form a new company,” explained Bob Brvenik, a principal in Paragon and former president of Prime. Paragon’s other six executive officers are also Prime alumni.
“It’s a very good time for outlets,” Brvenik said, citing growing sales productivity and the consumer flight to value. “In 2012, we will deliver nearly a million square feet.”
Paragon plans to begin construction by month’s end on a 500,000-square-foot outlet center in Livermore, on the eastern edge of the San Francisco Bay Area. Like the Grand Prairie center, the $165 million open-air development will deliver “iconic-type brands” geared toward women shoppers, Brvenik said. It’s slated to open in November 2012 and is 60 percent leased.
He projected that sales per square foot at both centers would “well exceed” the outlet industry average of $350. Both are situated in major metro areas.
Grand Prairie is 75 percent leased, he noted, to stores including Saks Fifth Avenue Off 5th, Cole Haan, J. Crew, Michael Kors, Banana Republic, Nike, Tommy Hilfiger, True Religion, Tumi, Lacoste, Lancôme and Levi’s. It’s expected to total 120 stores.
A Neiman Marcus Last Call had been planned under Prime but dropped from the project, said Brvenik, who anticipates signing another department store outlet as a second anchor.
“If you look at Neiman Marcus, they are inundated in the market,” he said. “The majority of people stayed with the project.”
Paragon Group joined Lightstone in December to buy Festival Bay Mall in Orlando, Fla., and is now looking at ways to redevelop it into an open-air center with outlets and entertainment venues, Brvenik added.
Prime redeveloped the shopping complex across International Drive from Festival Bay into an outdoor outlet center in 2007. It’s now called Orlando Premium Outlets and has 150 stores.
“We clearly know the market, and it’s a great market for value retail as well as entertainment-type concepts, so it will be a blend,” Brvenik said. “We will probably start construction in mid-2012 and deliver it in 2013.”